Le Lézard
Classified in: Science and technology, Business
Subject: EARNINGS

Lenovo Group: Third Quarter Results 2023/24


Lenovo Group Limited (HKSE: 992) (ADR: LNVGY), together with its subsidiaries (?the Group'), today announced third quarter results reporting Group revenue increasing 3% year-on-year to US$15.7 billion, and Group profitability improving quarter-to-quarter for the second time in a row. Net income was US$357 million on a non-Hong Kong Financial Reporting Standards (non-HKFRS)[1] basis, with net income margin up 0.4% quarter-to-quarter to 2.3%. The Group's diversified growth engines continued to deliver strong performance, with revenue from non-PC businesses accounting for 42% of Group revenue, up 1.3 points year-on-year.

The consistent quarter-to-quarter improvements over past quarters have been driven by the resilience of the Group's core businesses and the wider effectiveness of its ongoing transformation. The SSG business hit an important milestone of passing the US$2 billion revenue threshold, achieved a record high operating profit with operating margin of over 20% and grew revenue from managed services and project and solution services year-on-year for 11 straight quarters. The ISG business delivered quarter-to-quarter revenue growth and reached a record high US$1 billion revenue for its storage, software, and services businesses. Overall, the IDG business resumed revenue growth, outperformed the market and achieved year-on-year shipment growth for PCs, and maintained its industry-leading profitability.

Financial Highlights:

 

Q3 FY 23/24

US$ millions

Q3 FY 22/23

US$ millions

Change

 

Group Revenue

15,721

15,267

3%

Pre-tax income

471

605

(22%)

Net Income (profit attributable to equity holders)

337

437

(23%)

Net Income (profit attributable to equity holders ? non-HKFRS) [1]

357

447

(20%)

 

 

 

 

Basic earnings per share (US cents)

2.81

3.65

(23%)

Chairman and CEO quote ? Yuanqing Yang:

"Last quarter, we delivered on our promise and resumed year-on-year revenue growth, driven by both the resilience of our core businesses and the effectiveness of the service-led transformation. Looking ahead, our commitment to AI innovation, our pocket-to-cloud computing capabilities, full stack portfolio of smart devices, smart infrastructure, smart solutions and services, combined with our partnerships with other key leaders in AI, will ensure that we are well-positioned to capture the tremendous opportunities in AI."

Accelerating AI leadership

The Group is capitalizing on the significant growth opportunities afforded by the AI-era. In particular, the emerging trend of hybrid AI is directly driving the demand for AI PCs, a trend that will stimulate another industry refresh cycle as users require devices designed for more creativity and productivity. Alongside devices, hybrid AI is driving increased demand for hybrid infrastructure and customer demand for AI-native applications, solutions and services such as advisory, design, development and maintenance ? fueling growth across multiple customer verticals.

To further build its unique position in the AI-era, Lenovo is continuing its investment commitments in innovation. R&D headcount is up year-to-year at more than 25% of Group headcount, with R&D expenses-to-revenue ratio for the full fiscal year on track to hit an all-time high. This ongoing investment, together with a full portfolio of AI-enabled, AI-ready, and AI-optimized devices, infrastructure, solutions and services, is the foundation of Lenovo's vision of ?AI for All' - changing the way individuals and enterprises live and work and will fuel future sustainable growth for the Group.

Recent AI announcements from the Group include a partnership with Anaconda to accelerate AI development and deployment of Lenovo's high-performance data science workstations, a suite of AI-powered devices and solutions announced at the annual CES show, an expansion of its hybrid cloud platform for AI with new ThinkAgile hyperconverged solutions and ThinkSystem servers, and a newly launched cyber-resiliency as a service (CRaaS) offering.

Solutions and Services Group (SSG): Record revenue, record operating profit, driving AI solutions

Q3 FY23/24 performance:

Opportunities and Sustainable Growth:

Infrastructure Solutions Group (ISG): Capturing opportunities in AI infrastructure

Q3 FY23/24 performance:

Opportunities and Sustainable Growth:

Intelligent Devices Group (IDG): Resumed growth and solidified leadership

Q3 FY23/24 performance:

Opportunities and Sustainable Growth:

ESG highlights

Lenovo has been recognized for several ESG achievements over the past quarter, including:

[1] non-HKFRS measure was adjusted by excluding net fair value changes on financial assets at fair value through profit or loss, amortization of intangible assets resulting from mergers and acquisitions, mergers and acquisitions related charges; and the corresponding income tax effects, if any.

About Lenovo

Lenovo is a US$62 billion revenue global technology powerhouse, ranked #217 in the Fortune Global 500, employing 77,000 people around the world, and serving millions of customers every day in 180 markets. Focused on a bold vision to deliver smarter technology for all, Lenovo has built on its success as the world's largest PC company by further expanding into growth areas that fuel the advancement of ?New IT' technologies (client, edge, cloud, network, and intelligence) including server, storage, mobile, software, solutions, and services. This transformation together with Lenovo's world-changing innovation is building a more inclusive, trustworthy, and smarter future for everyone, everywhere. Lenovo is listed on the stock exchange of Hong Kong under Lenovo Group Limited (HKSE: 992)(ADR: LNVGY). To find out more visit https://www.lenovo.com, and read about the latest news via our StoryHub.

LENOVO GROUP

 

FINANCIAL SUMMARY

For the quarter ended December 31, 2023

(in US$ millions, except per share data)

 

 

 

 

 


Q3 23/24


Q3 22/23


Y/Y CHG

Revenue

 

15,721

15,267

3%

Gross profit

 

2,601

2,612

(0)%

Gross profit margin

 

16.5%

17.1%

(0.6) pts

Operating expenses

 

(1,988)

(1,862)

7%

R&D expenses

 

(547)

(579)

(6)%

(included in operating expenses)

 

 

 

Expenses-to-revenue ratio

 

12.6%

12.2%

0.4 pts

Operating profit

 

613

750

(18)%

Other non-operating income/(expenses) - net

 

(142)

(145)

(2)%

Pre-tax income

 

471

605

(22)%

Taxation

 

(94)

(123)

(23)%

Profit for the period

 

377

482

(22)%

Non-controlling interests

 

(40)

(45)

(11)%

Profit attributable to equity holders

 

337

437

(23)%

Profit attributable to equity holders- non-HKFRS [1]

 

357

447

(20)%

EPS (US cents)

 

 

 

 

Basic

2.81

3.65

(0.84)

Diluted

2.64

3.44

(0.80)

 


These press releases may also interest you

at 09:10
Qualcomm Incorporated today announced a quarterly cash dividend of $0.85 per common share, payable on June 20, 2024, to stockholders of record at the close of business on May 30, 2024. About Qualcomm Qualcomm relentlessly innovates to deliver...

at 09:10
Cogito, the leader in real-time AI guidance and coaching for the enterprise, today announced the signing of a multi-year agreement to continue its collaboration with a Fortune 25 telecommunications (telecom) provider. The extended relationship...

at 09:10
Backbase, the global leader in Engagement Banking, announces its collaboration with EverBank, a nationwide provider of high-value financial services to consumer and commercial clients, to support the bank's ongoing digital transformation. This...

at 09:10
New research from threat data and intelligence leader Flashpoint and ERP cybersecurity and compliance leader Onapsis reveals evidence that SAP business-critical applications are increasingly top of mind and valuable for cybercriminals. The report...

at 09:10
Magnittm, an Integrated Workforce Management (IWM) platform provider, announced that it was named a Leader in NelsonHall's NEAT vendor evaluation for Contingent Workforce Solutions (CWS) and Managed Service Programs (MSP) for the third consecutive...

at 09:10
Fiserv, Inc. , a leading global provider of payments and financial technology solutions, is enabling restaurants to streamline operations and enhance the customer experience with the new Clover Kiosk and an enhanced 24" Clover Kitchen Display System....



News published on and distributed by: